United States District Court, D. Delaware
E. Farnan and Michael J. Farnan, FARNAN LLP, Wilmington, DE;
Martin J. Black (argued), Joseph J. Gribbin, and Luke M.
Reilly, DECHERT LLP, Philadelphia, PA; Katherine A. Helm,
DECHERT LLP, New York, NY. Attorneys for Plaintiff.
Friedlander, Christopher M. Foulds, and Christopher P. Quinn,
FRIEDLANDER & GORRIS, P.A., Wilmington, DE; Benjamin J.
Razi (argued), Dennis B. Auerbach, and Jon-Michael Dougherty,
COVINGTON & BURLING LLP, Washington, DC. Attorneys for
ANDREWS, U.S. DISTRICT JUDGE
before me are Plaintiffs Motion for Judgment on the Pleadings
(D.I. 40), Defendant's Cross-Motion for Judgment on the
Pleadings (D.I. 45), and Plaintiffs Motion to Strike Portions
of Eisai's Reply Brief (D.I. 53). The Parties have fully
briefed the issues. (D.I. 41, 46, 47, 49, 51, 56, 57). I
heard oral argument on August 9, 2019. For the reasons set
out more fully below, I will grant Plaintiffs Motion for
Judgment on the Pleadings. Accordingly, I will deny
Defendant's motion and dismiss Plaintiffs Motion to
Strike as moot.
is a drug used to treat dry mouth caused by radiation therapy
for head and neck cancer and to treat dry mouth and dry eyes
in individuals with Sjogren's syndrome. (D.I. 3, Compl.
at ¶ 7). This case is about Plaintiffs license to
distribute Salagen in certain European and Commonwealth of
Independent States countries. (Id.).
and Eisai are the current parties to three contracts that cover
the distribution of Salagen: an April 11, 2000 license
agreement ("License Agreement"), an April 11, 2000
supply agreement, and a July 29, 2009 pharmacovigilance
Agreement"). (Id. at ¶ 6). Per these
agreements, Plaintiff is the exclusive licensee of Salagen in
its territory. (Id. at ¶ 7). Defendant is
required to supply Salagen, and other services, to Plaintiff
during the term of the License Agreement. (Id.).
original term of the License Agreement, found in Section
11.1, provided for a minimum 12-year contract duration with
rolling automatic continuations, assuming neither party sent
notice of termination, into perpetuity:
The term of this Agreement shall commence on the Effective
Date and unless earlier terminated in accordance with the
provisions of Article 11, shall continue in full force and
effect until the twelfth (12th) anniversary of the Effective
Date. Thereafter the term of this Agreement shall
automatically be extended for additional two (2) year terms,
unless written notice of termination is given by one party.
Notice of intent to terminate on the anniversary of the
original term or any subsequent extension shall be provided
no later than 180 days prior to such anniversary date.
(D.I. 3, Compl. Exh. A at § 11.1). The original term of
the License Agreement, therefore, extended until April 11,
2015, Novartis Pharma AG ("Novartis"), the licensee
at that time, and Eisai, at that point the licensor,
negotiated an amendment to the License Agreement. (D.I. 3,
Compl. at ¶ 17-19). Amendment 2 to the License Agreement
provided the licensee with an option:
As of the date of this Amendment, a permitted third-party
transferee under Section 16.3 shall have the option,
exercisable in its sole discretion upon written notice to
Eisai, to amend the term contained in Section 11.1 such that
the Agreement will expire on April 11, 2026. In the event
such permitted third-party transferee exercises such option,
following April 11, 2026 (i) the term will automatically be
extended for additional two (2) year terms unless written
notice of termination is given by a Party and (ii) notice of
intent to terminate on the anniversary of the term or any
subsequent extension shall be provided no later than 180 days
prior to such anniversaly date. In the event such permitted
third-party transferee does not exercise such option, the
term contained in Section 11.1 will remain as is.
(D.I. 3, Compl. Exh. A at Amend. 2, ¶ 2). As
consideration for this option, Novartis paid Eisai $500, 000.
(Id. at¶ 1). Novartis also agreed to an
augmented minimum royalty scheme. (Id.).
20, 2015, Eisai consented to Novartis's request to assign
the License Agreement to Merus. (D.I. 3, Compl. at ¶
20). In 2018, Eisai allowed Merus to assign ...